National income tax rules that restrict the free movement of the Treaty on the Functioning of the European Union (TFEU) may in some cases be justified by, for example, the justification grounds that has been developed in case law of the European Court of Justice (ECJ). Such a justification ground is the need to prevent tax avoidance. This thesis main issue is to investigate when national tax rules that restrict the free movement of the TFEU can be justified with the justification ground the need to prevent tax avoidance.

Traditionally the justification grounds have been assessed separately. In order to justify tax rules on the basis of the need to prevent tax avoidance as a separate ground, the ECJ strictly requires that the purpose of... (More)

National income tax rules that restrict the free movement of the Treaty on the Functioning of the European Union (TFEU) may in some cases be justified by, for example, the justification grounds that has been developed in case law of the European Court of Justice (ECJ). Such a justification ground is the need to prevent tax avoidance. This thesis main issue is to investigate when national tax rules that restrict the free movement of the TFEU can be justified with the justification ground the need to prevent tax avoidance.

Traditionally the justification grounds have been assessed separately. In order to justify tax rules on the basis of the need to prevent tax avoidance as a separate ground, the ECJ strictly requires that the purpose of the rules is to prevent wholly artificial arrangements. The development in case law since the Marks & Spencer case has led to the ECJ making an overall assessment of several justification grounds. This has caused a lot of uncertainty and the predictability has become limited. When the objective of preventing tax avoidance has been taken together with others justification grounds the Court does not uphold the strict requirement of wholly artificial arrangements. Based on this case law the doctrine considers that the Court has chosen two ways for the justification ground the need to prevent tax avoidance. The development in this case law also makes it much easier for the Member States to justify restrictive national measures. In the new SIAT case the Court seems to have applied several justification grounds separately and the justification ground the need to prevent tax avoidance was one among other applied grounds. This case cannot with certainty be interpreted as the Court went back to assess the justification grounds separately. The SIAT case indicates that the requirements for artificial arrangements are still relevant today. Within the framework of proportionality assessment, the ECJ also imposed a new requirement that rules must fulfill the requirements for legal certainty and predictability in order to be accepted.

To illustrate, when national restrictive rules can be justified with the justification ground the need to prevent tax avoidance, I have also chosen to analyze if the Swedish Tax Avoidance Law and the CFC-legislation can be justified on this ground. Since the ruling in the Cadbury Schweppes case Sweden has been forced to oversee their CFC-legislation. In order to fulfill the requirement on artificial arrangements set up in the Cadbury Schweppes case Sweden introduced a new rule in their CFC-rules. But despite this the Swedish rule is differently formulated than the ruling. The consequence of this is that many have questioned if the CFC-rules are consistent with the Union law. Only the mere fact that the Swedish rules are formulated differently does not mean that the established principles of the ruling are abandoned. If the CFC-rules at a future application are given an interpretation in conformity with Union law the Swedish CFC-rules can probably be justified. The fact that the prerequisites in the Swedish Tax Avoidance Law are quite open might mean that the Tax Avoidance Law has to be adapted to Union law, especially after the new case SIAT. In this essay I provide two objections which may mean that the Tax Avoidance Law may not be justified. One objection is that the third prerequisite in the Tax Avoidance Law could be perceived as more stringent than Union law allows because it may capture other situations than wholly artificial arrangements. But this lack can be overcome by giving the law an interpretation in conformity with Union law. The second objection concerns the vague prerequisites in the Tax Avoidance Law and especially the fourth prerequisite because this prerequisite is most crucial to whether the law is applicable. The problem is that this prerequisite is difficult to apply and leaves a lot of questions on how the law actually applies. Therefore, the Tax Avoidance Law has repeatedly been criticized for lacking in predictability and legal certainty. In view of this the Tax Avoidance Law tends to risk lacking in the requirement of legal certainty that was required in the case SIAT. The Tax Avoidance Law can nevertheless be justified because general clauses against tax avoidance are used by several Member States, and are a generally accepted method to prevent tax avoidance. In those cases it may be more acceptable if the requirement of legal certainty cannot be achieved, especially when the law in order to achieve its purpose requires some vagueness. (Less)

@misc{3350113,
abstract = {National income tax rules that restrict the free movement of the Treaty on the Functioning of the European Union (TFEU) may in some cases be justified by, for example, the justification grounds that has been developed in case law of the European Court of Justice (ECJ). Such a justification ground is the need to prevent tax avoidance. This thesis main issue is to investigate when national tax rules that restrict the free movement of the TFEU can be justified with the justification ground the need to prevent tax avoidance.
Traditionally the justification grounds have been assessed separately. In order to justify tax rules on the basis of the need to prevent tax avoidance as a separate ground, the ECJ strictly requires that the purpose of the rules is to prevent wholly artificial arrangements. The development in case law since the Marks & Spencer case has led to the ECJ making an overall assessment of several justification grounds. This has caused a lot of uncertainty and the predictability has become limited. When the objective of preventing tax avoidance has been taken together with others justification grounds the Court does not uphold the strict requirement of wholly artificial arrangements. Based on this case law the doctrine considers that the Court has chosen two ways for the justification ground the need to prevent tax avoidance. The development in this case law also makes it much easier for the Member States to justify restrictive national measures. In the new SIAT case the Court seems to have applied several justification grounds separately and the justification ground the need to prevent tax avoidance was one among other applied grounds. This case cannot with certainty be interpreted as the Court went back to assess the justification grounds separately. The SIAT case indicates that the requirements for artificial arrangements are still relevant today. Within the framework of proportionality assessment, the ECJ also imposed a new requirement that rules must fulfill the requirements for legal certainty and predictability in order to be accepted.
To illustrate, when national restrictive rules can be justified with the justification ground the need to prevent tax avoidance, I have also chosen to analyze if the Swedish Tax Avoidance Law and the CFC-legislation can be justified on this ground. Since the ruling in the Cadbury Schweppes case Sweden has been forced to oversee their CFC-legislation. In order to fulfill the requirement on artificial arrangements set up in the Cadbury Schweppes case Sweden introduced a new rule in their CFC-rules. But despite this the Swedish rule is differently formulated than the ruling. The consequence of this is that many have questioned if the CFC-rules are consistent with the Union law. Only the mere fact that the Swedish rules are formulated differently does not mean that the established principles of the ruling are abandoned. If the CFC-rules at a future application are given an interpretation in conformity with Union law the Swedish CFC-rules can probably be justified. The fact that the prerequisites in the Swedish Tax Avoidance Law are quite open might mean that the Tax Avoidance Law has to be adapted to Union law, especially after the new case SIAT. In this essay I provide two objections which may mean that the Tax Avoidance Law may not be justified. One objection is that the third prerequisite in the Tax Avoidance Law could be perceived as more stringent than Union law allows because it may capture other situations than wholly artificial arrangements. But this lack can be overcome by giving the law an interpretation in conformity with Union law. The second objection concerns the vague prerequisites in the Tax Avoidance Law and especially the fourth prerequisite because this prerequisite is most crucial to whether the law is applicable. The problem is that this prerequisite is difficult to apply and leaves a lot of questions on how the law actually applies. Therefore, the Tax Avoidance Law has repeatedly been criticized for lacking in predictability and legal certainty. In view of this the Tax Avoidance Law tends to risk lacking in the requirement of legal certainty that was required in the case SIAT. The Tax Avoidance Law can nevertheless be justified because general clauses against tax avoidance are used by several Member States, and are a generally accepted method to prevent tax avoidance. In those cases it may be more acceptable if the requirement of legal certainty cannot be achieved, especially when the law in order to achieve its purpose requires some vagueness.},
author = {Pepaj, Shkurte},
keyword = {Hindra skatteflykt,Skatterätt,CFC-regler,Skatteflyktslagen},
language = {swe},
note = {Student Paper},
title = {Rättfärdigandegrunden behovet att hindra skatteflykt},
year = {2012},
}